Applied Industrial Technologies (NYSE:AIT) and Kadant (NYSE:KAI) Critical Survey

Applied Industrial Technologies (NYSE:AIT) and Kadant (NYSE:KAI) are both industrials companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, earnings, valuation, dividends, institutional ownership, profitability and risk.

Profitability

This table compares Applied Industrial Technologies and Kadant’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Applied Industrial Technologies	8.34%	21.64%	12.91%
Kadant	9.69%	11.57%	7.09%

Analyst Recommendations

This is a summary of recent ratings and price targets for Applied Industrial Technologies and Kadant, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Industrial Technologies	0	1	5	0	2.83
Kadant	0	2	1	1	2.75

Applied Industrial Technologies presently has a consensus price target of $313.67, suggesting a potential upside of 3.57%. Kadant has a consensus price target of $341.50, suggesting a potential upside of 19.87%. Given Kadant’s higher possible upside, analysts clearly believe Kadant is more favorable than Applied Industrial Technologies.

Volatility & Risk

Applied Industrial Technologies has a beta of 0.86, indicating that its stock price is 14% less volatile than the S&P 500. Comparatively, Kadant has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500.

Insider & Institutional Ownership

93.5% of Applied Industrial Technologies shares are held by institutional investors. Comparatively, 96.1% of Kadant shares are held by institutional investors. 1.6% of Applied Industrial Technologies shares are held by insiders. Comparatively, 1.3% of Kadant shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Applied Industrial Technologies and Kadant”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Industrial Technologies	$4.56 billion	2.45	$392.99 million	$10.59	28.60
Kadant	$1.05 billion	3.20	$101.97 million	$8.65	32.94

Applied Industrial Technologies has higher revenue and earnings than Kadant. Applied Industrial Technologies is trading at a lower price-to-earnings ratio than Kadant, indicating that it is currently the more affordable of the two stocks.

Dividends

Applied Industrial Technologies pays an annual dividend of $2.04 per share and has a dividend yield of 0.7%. Kadant pays an annual dividend of $1.44 per share and has a dividend yield of 0.5%. Applied Industrial Technologies pays out 19.3% of its earnings in the form of a dividend. Kadant pays out 16.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Applied Industrial Technologies has increased its dividend for 16 consecutive years and Kadant has increased its dividend for 12 consecutive years. Applied Industrial Technologies is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Applied Industrial Technologies beats Kadant on 10 of the 18 factors compared between the two stocks.

About Applied Industrial Technologies

Applied Industrial Technologies, Inc. distributes industrial motion, power, control, and automation technology solutions in North America, Australia, New Zealand, and Singapore. It operates in two segments, Service Center Based Distribution, and Engineered Solutions. The company distributes bearings, power transmission products, engineered fluid power components and systems, specialty flow control solutions, advanced automation products, industrial rubber products, linear motion components, automation solutions, tools, safety products, oilfield supplies, and other industrial and maintenance supplies; and motors, belting, drives, couplings, pumps, hydraulic and pneumatic components, filtration supplies, valves, fittings, process instrumentation, actuators, and hoses, filtration supplies, as well as other related supplies for general operational needs of customers' machinery and equipment. It also operates fabricated rubber shops and service field crews that install, modify, and repair conveyor belts and rubber linings, as well as offer hose assemblies. In addition, the company provides technical support services; engages in the distribution of fluid power and industrial flow control products; advanced automation solutions, including machine vision, robotics, motion control, and smart technologies. It distributes industrial products through a network of service centers. The company serves various industries, including agriculture and food processing, cement, chemicals and petrochemicals, fabricated metals, forest products, industrial machinery and equipment, life sciences, mining, oil and gas, primary metals, technology, transportation, and utilities, as well as government entities. The company was formerly known as Bearings, Inc. and changed its to name to Applied Industrial Technologies, Inc. in 1997. The company was founded in 1923 and is headquartered in Cleveland, Ohio.

About Kadant

Kadant Inc. supplies technologies and engineered systems worldwide. It operates in three segments: Flow Control, Industrial Processing, and Material Handling. The Flow Control segment develops, manufactures, and markets fluid-handling systems and equipment, such as rotary joints, syphons, turbulator bars, expansion joints, and engineered steam and condensate systems; and doctoring, cleaning, and filtration systems and related consumables consisting of doctor systems and holders, doctor blades, cleaning shower and fabric-conditioning systems, forming systems and wear surfaces, and water-filtration systems. The Industrial Processing segment develops, manufactures, and markets ring and rotary debarkers, stranders, chippers, engineered knife systems, industrial automation and control, recycling and approach flow systems, and virgin pulping process equipment for use in the packaging, tissue, wood products, and alternative fuel industries. The Material Handling segment offers conveying and vibratory equipment, and baling products; and manufactures and sells biodegradable absorbent granules for carriers in agricultural, home lawn and garden, professional lawn, turf, and ornamental applications, as well as for oil and grease absorption. The company markets and sells its products, services, and systems through direct sales, independent sales agents, and distributors. The company was formerly known as Thermo Fibertek, Inc. and changed its name to Kadant Inc. in July 2001. Kadant Inc. was incorporated in 1991 and is headquartered in Westford, Massachusetts.